Amicus Therapeutics, Inc. (FOLD) Earnings Call Transcript & Summary

Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the Biotech Analysts. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Amicus Therapeutics with CEO, Bradley Campbell. Welcome, Bradley.

Thank you, Jeff. Appreciate it. Thanks to Morgan Stanley for having us.

Definitely. For those who may not be familiar with Amicus, can you provide a brief introduction?

Sure, yes. So, Amicus, for those of you who don't know, we focus on developing next-generation therapies for patients living with rare genetic diseases. And we really have 3 core areas of focus for this year to drive value for our shareholders. The first is continuing to grow Galafold. That's our approved product for Fabry disease. And you might have seen that we had a great quarter last quarter. Delivered $94 million in global sales, and we're able to raise our guidance for the year to 14% to 18% growth. So fantastic trajectory there and one that we continue seeing as a robust growth engine for us going forward. Second one, of course, is our Pompe therapy, AT-GAA, which is now approved in Germany and the U.K. under the trade name Pombiliti and Opfolda. Two component therapy using a next-generation enzyme replacement therapy combined with an enzyme stabilizer to treat patients living with Pompe disease. Again, launch has already started in Europe and really eager, of course, to get the FDA to give us an approval here in the third quarter, which is what we expect. And then, of course, the last piece of the puzzle is our financial strength. We have, again, delivered consistent high-level growth from a revenue perspective. But this year, we'll make an important milestone from a financial perspective and turn the corner to non-GAAP profitability and then hopefully continue on our path to eventually GAAP profitability and positive free cash flow. So a really exciting time for Amicus. I feel like we're turning the page to kind of the next chapter of our evolution as a company and glad to have a conversation with you today.

Great. Well, let's start with Galafold. As you mentioned, you raised revenue guidance to 14% to 18%. Can you just talk about what factors drive the lower and the upper ends of the range?

Sure. Yes. So what led us to raising the guidance in the first place was just fantastic patient demand. And what we do shared at the last quarterly conference call was net new patient starts that were at levels we haven't seen, since the first couple of years of launch. So really robust growth driven by demand from patients, and that was really across all of our markets. So just the truest measure of demand and performance is getting new patients on drug. And that's what drove us to be able to increase our guidance. And so kind of how does that look over the course of the year. I would say if we continue to see those kinds of numbers, then I think you could see us maybe being at the higher end of the range of that growth range. If things look more like they do it in normal period of time, I think we will come in kind of the middle of for whatever reason, things cool off a little bit, you could be towards the bottom end of the range. But where we sit today, I think, it will be a really strong year for us and look forward to that demand continuing.

Now growth in the Fabry market is driven by diagnosis of new patients. And you've said that it is under diagnosed. So how much more room is there? And how do you drive further uptake with Galafold in the diagnosed untreated population.

Yes. So just a few numbers to start with. Interestingly, when we launched Galafold in 2016, excuse me, in Europe first. There are about 10,000 patients who are diagnosed with Fabry globally, about half of them were treated patients. Since then, now we estimate that there's 17,000 patients who are diagnosed with Fabry disease, about 11,000 of which are treated. And so you've seen significant growth, both in the diagnosed population and the treated population. The drivers of that really increase in diagnosis. First, I think there has been a growing awareness, and we've been part of this, but still have the legacy companies in Fabry that Fabry is not just a male disease that affects primarily the kidneys. What we know now is that it's actually more of a later onset disease, and it affects the heart, kidneys and CNS. And so I think that understanding has changed, so kind of what to look for. But I think there's also been a fundamental increase in the availability of genetic testing and low cost or no cost genetic testing available around the world. And I think that's really allowed physicians, who suspect a genetic disease like Fabry to confirm it very quickly. And then you have this multiplier effect, of course, with -- in the Fabry space because it's an X-linked disease, you see 4 to 5 family members, who have diagnosed untreated Fabry disease, if you diagnose one of them. In terms of how do you bring on the diagnosed untreated into treatment. Part of it is a natural course of their disease, right? So some of them are going to be newly diagnosed and maybe they are diagnosed through a family member, and so they don't necessarily have symptomatology, but they will progress eventually. So I think part of it is kind of the natural evolution of disease. But I really think the other piece of it is that we've now established Galafold as standard of care in patients with amenable mutations. And so I think when patients are presented with the choice of an every other week infusion for the rest of their life versus a safe oral therapy like Galafold, I think you're seeing a preferential choice for Galafold. And so if you look at that growth to now 11,000 treated patients, we estimate globally, 1,000 of them actually were naive to treatment and are in Galafold. So we've grown the market by 1,000 patients in the time that we've been on the market.

Now you touched upon this, but one of the other growth drivers is continued penetration in existing markets. And so what kind of initiatives are you implementing for those?

Yes, that's a big piece of it. So -- and it is both sides, right? It's both switching patients as well as bringing on the diagnosed untreated. We're at about a 60% market share globally for Galafold today, which means you still have 40% of treated amenable patients to switch. So in our existing markets, there's a lot of opportunity there. So how do we do that? Part of it, interestingly is just continued medical education. It's kind of the nuts and bolts of biotech marketing. But what we found is even though the genetics is, of course, the treating physicians know a lot about Fabry, there's still so much opportunity to educate nephrologists, cardiologists, neurologists, who also are seeing what we call kind of a wrong track patients. So they're sitting there with the cardiomyopathy, but it actually have Fabry. So that education is a really important part of that. A big piece of it is continued evidence generation. So we do that through publications. We've recently, in the last couple of years, published on long-term data from our own clinical studies. We're now starting to publish on a registry, which is the FollowME registry. So new data showing the long-term impact of Galafold on patients. And then there's also some really exciting stuff around trying to find new patients. And we are using AI as a number of companies are to help hone in on our diagnostic algorithms. And one interesting example, which kind of hits 2 different pieces here. We're working with a collaborator in the U.K., where they have more of a closed loop system to find undiagnosed Fabry patients and we actually found this is remarkable. We found that the vast majority of patients, who are treated with Galafold in -- treated with any Fabry therapy sit in the top 2 deciles of the socioeconomic ladder in the U.K. We know, of course, that Fabry is not -- is not a disease of the rich. It's a disease of genetics. And so it affects everybody and even in a system like the U.K., which is one of the much more developed and certainly knowledgeable around Fabry, you find this disparity. So number one, it's an opportunity for us to, of course, go out there and find more patients with Fabry, who could be treated, but it's also a way to start to address some of the health in equities, which I think is just a really interesting commentary on where we are with medicine and that hopefully a great opportunity to help level the playing field there.

Great. Well, let's shift to AT-GAA. What makes it innovative approach and how is it differentiated?

Yes. So AT-GAA, of course, as I mentioned before, 2 component therapy, right? You have an enzyme replacement therapy and then you have a small molecule enzyme stabilizer. On its phase, 1 of the most obvious differentiations between the 2 -- between our product or our therapy, I should say, and the other 2 existing products is the efficacy we've seen in the Phase III clinical study. So again, just as a reminder, in the switch population showing benefit on 6-minute walk and forced vital capacity versus standard of care. So I think that's kind of the obvious place to look, but the reality is it's a very different mechanism, and I think that's what helps describe why we're seeing those outcomes and why they're differentiated from the other therapies. So on the enzyme side of things, I think if you look in the literature, if you look at the history of treatment in this space, you had an initial enzyme replacement therapy that unfortunately did not have optimal carbohydrates, which are -- these are infused therapies, the carbohydrates are responsible for uptake into the key muscle cells in particular. So we designed a product by naturally selecting a cell line that exhibited high amounts of that carbohydrate structure. That's really important because number one, it helps address the uptake issue. But number two, what we've learned is that in order to be the most efficient these enzymes in Pompe, GAA needs to be processed down within the cell within the lysosome to a much more efficient form of GAA in order to turn over substrate. In fact, the mature form is 10x more efficient at chewing up substrate than the immature form. If you look at the other products that are out there, they use a very different way. The next-generation product uses a very different way to address that carbohydrate mechanism, and we think is less efficient in turning over glycogen. And we've seen that in some preclinical studies that have been published. The other piece, of course, is that the small molecule stabilizer. We're the only product that brings a small molecule stabilizer to that equation. And why is that important? It's because when these enzymes live in the cell, they're protected by the PH and the nature of the cell. When they're infused in the bloodstream, we've shown over and over again that they actually tend to lose their activity become unstable and become less potent and so by adding the small molecule, you stabilize the enzyme and you keep it in a more protected form so that more of it can be taken up into the tissue in an active form.

You mentioned the Phase III. So earlier this year, you announced long-term data from the Open-Label Extension Study. Can you just remind us what you saw?

Yes. I think the 2 important takeaways there were, number one, we saw that the effects were generally consistent and durable across the population that we studied. So that's always positive. I think the second thing, too, is we saw that the biomarkers also were consistent. And I think if you think about the endpoints in Pompe disease, both 6-minute walk and forced vital capacity have an element of volition in them. And so especially when you're in an open-label part of a study to be able to also see a very objective measure of biomarkers that is staying reduced over time as I think it helps corroborate that what we're seeing on the clinical side is a really true effect.

You recently launched in Europe and U.K., as you mentioned. How is the launch going in those geographies relative to your expectations?

It's going really well. So remember, a couple of key things that we said we would look for in this first wave of launch. The first is trying to convert all of our existing patients, expanded access or ongoing clinical study patients to commercial product. And what we said is we would have a target of 90 days in order to be able to do that from approval to or reimbursement, I should say, to conversion in any market that we launch into. In Germany, where we were approved a few weeks ago, we have now converted all of our expanded access patients and have appointments scheduled to convert all of our clinical trial patients. And we've just started treating our first commercial switch patients. So going really well. And then when we go and actually ask the physicians and the patients, how are they doing, how has the switch been? We're getting very positive qualitative feedback, which is really good. In the U.K., where we just got approved 3 weeks ago, it usually takes about -- sorry, 30 days to push funding from the NHS into the local centers and that's when you can start that process of conversion that we talked about. Good news is actually that happened even faster than expected. So we just had our first commercial orders this week from a home infusion company, and we have now started to schedule switching patients, both the EAMS, which is the expanded access cohort there as well as the clinical trial patients. So I'm confident there too, we'll be able to switch those patients within that 90-day period. If you think about those 2 cohorts about 45 or 50 patients in the U.K., 20 patients in Germany and then you add the 45 or 50 patients in the United States, who would be eligible, 100 and change patients that we're confident we can convert by the end of this year to commercial drug. And then, of course, any additional commercial patients you can bring on.

And then I guess with regards to the transition of patients to commercial drug, anything that surprised you?

I would say the one thing that we were looking out for is -- we're the only 2 component therapy, so they do have to take the small molecule. And so we were listening very carefully for whether or not that would be a burden to these patients. What we had heard ahead of time and seen in clinical studies is that, in fact, these patients are oftentimes taking concomitant meds anyway, either an oral NSAID or an oral benadryl or some other similar kind of anti-inflammatory and/or antihistamine, I should say. And so it's been very easy for them to kind of just swap the small molecule into their regimen. And then the other piece too is just, again, it's anecdotal, but it's -- you're listening very carefully. Physicians and pharmacists have said that it's been a very easy switching process, the reconstitution. Interestingly, we have a higher unit volume of drug in our vials versus Myozyme as an example. So it's about half the number of vials that have to be reconstituted. So that's been, I think, a net positive or incremental, net positive. And then we're hearing that patients are feeling well. So I think all of that together says that it's going really well.

And then outside of transitioning clinical trial patients, I guess, it may be still a little bit early, but are the commercial patients mainly coming from other drugs? Or are they newly diagnosed -- do you have a sense for how that's kind of shaping out early on?

It's still a little early, but what we're seeing so far is that it's switched patients from an existing therapy, but that makes sense, right, because right now, we estimate there's about 4,500 total patients that are treated today and they're probably 200 or 300 or so new patients that are diagnosed every year and come on to therapy. So the vast majority of patients that we can access initially are going to be switch patients anyway. So I would say, if you look forward, this year, the majority is more likely to be the conversion patients and then whatever additional patients we can put on drug this year. And that's really the goal. We shouldn't expect a big revenue contribution this year, but we want to maximize the run rate going into next year. Going into next year, once most of the conversion has happened, I think then the majority of new patients are going to be switch patients with a small number of diagnosed untreated patients coming on, who are newly diagnosed.

And then you talked about anecdotal comments from physicians and patients. Can you just remind us of your efforts of [indiscernible] patient outreach in the EU?

Yes. So in Europe, it's very different from the United States, where you really can't communicate directly with patients. You can communicate with patient advocacy organizations through their scientific advisory boards, et cetera. But I think in Europe and everywhere, frankly, I think there's a pretty high awareness of this medicine in the patient community, but that's really has to be an organic effort. It's not something that we can do directly. With physicians, the good news is in both U.K. and Germany, we're able to see the top prescribers within the first 30 days. So -- and a number of them have already had experience with AT-GAA. So in the U.K., all 6 of the treating centers were already either EAMS, which is the expanded access mechanism or clinical trial sites. So we had relationships with all of them. In Germany, it's a little bit more like the U.S. So there's probably, I don't know, 20 or 30 KOLs, top treating centers and then maybe 100 or so additional infusion centers that are more disparate and we're able to get in front of those top treaters very quickly and now working our way through the other one. So the outreach effort has been strong and consistent and very good so far. We also have some key conferences. SSIM actually just happened in Israel and a number of European doctors go there. So that's a key platform for all of our data presentations. We had our publication already in Lancet Neurology for the Phase III data. So that's out there and you'll look to see us continue to publish on both long-term extension data, but also preclinical data on some of the things I mentioned in terms of the mechanism. And all of those are ways to engage physicians.

And you touched upon this, but maybe if you can clarify or reiterate again, just for the switch patients, what data points or messaging resonates most with patients and physicians?

Yes, I do think it's that 3-tiered messaging. The first is, and this is the most important piece, which is we are the only company that studied head-to-head in an experienced population, what happens when you take a patient off of an existing therapy and put them onto our medicine. And that's where we showed in that population, those clear benefits in 6-minute walk and force vital capacity, I think that, for sure, is the leading message with physicians. But you also then back that up with a very consistent story that the biomarkers tell, right? Hex4, CDK, ALT, [ AST ] those kinds of biomarkers, which I think are more objective measures. And then I do think that mechanistic difference will be really important. I think as we go out there and try to differentiate ourselves from both the first generation therapy, Myozyme as well as the new one Nexviazyme being able to tell the why of it will also be important, and we hope to continue to elucidate that through publications and posters and presentations at conferences.

Great. Now U.S. approval is expected imminently. Can you just talk about the commercial launch preparation activities and how you're planning to target of the patients?

Yes. So really excited as soon as the FDA gives us a green light, we are ready to go. A couple of things that we have done proactively. The first is we've actually brought product over and it's sitting in what's called the free trade zone. So even though it's unlicensed product, we have our supply, our initial launch supply sitting in a warehouse in a free trade zone. So that's ready to be labeled and then sent out to the specialty pharmacies and distributors. We actually had our last launch training meeting in -- at the end of July. So the sales force is fully trained on the label, on the competitive positioning and all those elements. Likewise, the medical affairs team is part of that process as well. We did add to our hub, so our patient services hub, we added a handful of case managers, they're hired and trained and ready to go. And then likewise, we added to our field force in the United States, you can do this, a handful of patient education liaisons, who are meant to help when patients are on therapy, help them sort of manage the logistics of the therapy. So all of those pieces are in place. And maybe the biggest differentiator between being kind of launch ready and where we were with Galafold is just the experience of the team. This team has been in place, since 2018, when we launched Galafold in the U.S., market access, medical affairs, sales, leadership, marketing, and it's just a really experienced, passionate team. And even though Galafold continues to grow and will continue to be a core part of the business, having that experienced team ready to launch AT-GAA is just really exciting and we're very excited for the starting gun to go.

Any learnings sort of from the launch in Europe or U.K. that your team can apply to the U.S. launch?

Yes. So part of it, I think, is that -- it's in the conversion process. So expanded access is a little bit easier in the sense that they don't -- there's no -- they don't have to do any kind of end-of-study activities, whereas in Europe, you sorry, any existing clinical trial patient they have to do an end-of-study visit. So kind of how to pass the baton in the right way, making sure that you have a clinical product all the way until the switch and then you have commercial products ready to go. Working with physicians on how to schedule those handover. So I think that's been an important part of the process. And as I said, it's gone really well. So I think we can take those learnings on how to do that in a way that supports physicians and patients, but also moves quickly. I think to what I mentioned earlier in terms of the ease of transition, what we found with Galafold, where we were launched in Europe 2 years ahead of when we launched Galafold in the United States, we were able to work with a number -- in particular, the nurses, who are the ones kind of on the front lines on what was the experience like switching from ERT to a small molecule? What should I expect? Are there any side effects and then we took those nurses and had them speak at various conferences and symposia to help educate the newcomers to the switch process. So I think taking some of those learnings from just how to easily switch them will be important as well.

Okay. Great. Maybe moving on to the pipeline, like amongst your earlier-stage pipeline candidates, what excites you the most.

It's like asking me to pick a favorite child. I don't know how to do that. So no, in all seriousness, yes, we have -- we do have a pipeline. We have judiciously invested in continuing that pipeline going, and that's in the context of our profitability target for the back half of this year. But we are continuing to work on that. As a reminder, we've got our Fabry gene therapy, our Pompe gene therapy and then our next-generation chaperone. In the case of the 2 gene therapies, we have and we've said this as we kind of wound down the rest of our non-Pompe, Fabry gene therapy programs. We think that there are some real challenges in AAV delivery of a systemic gene therapy, especially in Fabry and Pompe. And I don't want to speak to other people's technologies. But from our perspective, I don't know for sure that we're ever going to find a way to use AAV to deliver those medicines. We do believe our transgenes are very differentiated, the proteins that we're delivering, and we think those have real utility. But I would say right now, we're looking, number one, to confirm that suspicion that AAV may or may not be the right vehicle, but number two, look for potentially other vehicles to deliver those transgenes. I think you'll see us start to talk more about that as we answer some of those questions and hopefully into next year. We can talk a little bit more about where we are there. And then with the chaperone, also very excited, super early still, but the goal there would be to find a chaperone that increases the number of mutations that we can target. There are a number of mutations that we saw that were like borderline amenable, who didn't quite meet the criteria. So could you expand the population, then of course, any benefit you could give over Galafold in the existing patient population. But again, it's early, we're still looking for our final candidate selection. So I do think that will be an important part of the story going forward. Amicus is dedicated to being leaders in the Fabry and Pompe space. I hope that one of those programs will be, one or many of them will be able to get into the clinic. But you can see us continuing to be leaders in that space and hopefully, over the course of next year, we'll have more to say on our internal pipeline.

And you've been saying that you're on track to achieve profitability this half? Like so how do you think about the importance of that relative to accelerating earlier-stage programs?

Yes. I really believe right now we're sort of turning the chapter kind of to the next phase of our growth from an Amicus perspective, which I think means continuing to be disciplined on the profitability target. So what you should expect to see us do with our pipeline is only invest in the pipeline with whatever dollars are remaining after we deliver on our financial goals. And so this year, non-GAAP profitability, we'll talk more about to tighten this up, but you could see that stepping its way through GAAP profitability and then positive free cash flow or EBITDA or whatever measure of profit you want to look at. But we will continue to invest. And then as the portion of R&D OpEx that's going towards the ongoing clinical extension studies to our post-marketing commitments, as that kind of continues to hone down on Fabry and Pompe, we'll fill that in with investment in the pipeline.

Great. Maybe one last question. Can you just remind us how much cash you have and the runway that gets you?

Yes. So $266 million at the end of last quarter Q2. We don't think about it as much as from a runway perspective anymore. What we've said is that our goal is to get to self-sustainability in order to do that, what we've said is we put an ATM in place at the end of last year, and you saw that we had been kind of judiciously using that over the last couple of quarters just to maintain a healthy operating cash balance. But we have enough cash and enough revenue to fund our operations for the foreseeable future with no intent to pursue other avenues to raise capital.

Great. Looks like we'll have to leave there. Thank you very much for your time.

Thank you very much.